Correlation Between IMedia Brands and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both IMedia Brands and Sally Beauty at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IMedia Brands and Sally Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMedia Brands and Sally Beauty Holdings, you can compare the effects of market volatilities on IMedia Brands and Sally Beauty and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IMedia Brands with a short position of Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMedia Brands and Sally Beauty.
Diversification Opportunities for IMedia Brands and Sally Beauty
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between IMedia and Sally is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding IMedia Brands and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings and IMedia Brands is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IMedia Brands are associated (or correlated) with Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of IMedia Brands i.e., IMedia Brands and Sally Beauty go up and down completely randomly.
Pair Corralation between IMedia Brands and Sally Beauty
Given the investment horizon of 90 days IMedia Brands is expected to under-perform the Sally Beauty. In addition to that, IMedia Brands is 3.82 times more volatile than Sally Beauty Holdings. It trades about -0.9 of its total potential returns per unit of risk. Sally Beauty Holdings is currently generating about 0.03 per unit of volatility. If you would invest 1,231 in Sally Beauty Holdings on August 28, 2024 and sell it today you would earn a total of 178.00 from holding Sally Beauty Holdings or generate 14.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 3.95% |
| Values | Daily Returns |
IMedia Brands vs. Sally Beauty Holdings
Performance |
| Timeline |
| IMedia Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sally Beauty Holdings |
IMedia Brands and Sally Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMedia Brands and Sally Beauty
The main advantage of trading using opposite IMedia Brands and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMedia Brands position performs unexpectedly, Sally Beauty can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sally Beauty will offset losses from the drop in Sally Beauty's long position.The idea behind IMedia Brands and Sally Beauty Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |